Amendment 64: Section 149 (Companies to have Board of Directors)
Unlike the upper limit of 12 Directors as per Companies Act’1956, now companies can have a maximum of 15 directors and this limit can be further increased after passing a special resolution.
Amendment 65: Section 149 (Companies to have Board of Directors read with Rule No. 3)
In order to protect the interest of working women and to give an equal hand to the feminine talent, it has been provided that the following class of companies shall have to appoint at least one woman director:-
a. Every listed company
b. Every other public company which has a paid up share capital of > Rs. 100 crores or a turnover of > Rs. 300 crores.
The law provides for a one year period to comply with this law in case of existing companies. However, all the companies incorporated under the new law shall have a period of six months to comply with this law.
Amendment 66: Section 149 (Companies to have Board of Directors)
This rule specifies that one director in a company should be such who has stayed in India for not less than 182 days in the previous calendar year.
Amendment 67: Section 149 (Companies to have Board of Directors read with Rule No. 4)
At least 1/3 of the Board of every listed pubic company should consist of independent directors. The existing companies have been provided 1 year transition period to comply with the provisions of this act (from the date of commencement of the Act).
Also, the following class or classes of companies shall have at least two directors as independent director:-
a. Public companies having paid up share capital of > Rs. 10 crores or more or
b. Public companies having a turnover of > Rs. 100 crores or more or
c. Public companies which have in an aggregate, outstanding loans/ debentures & deposits, exceeding Rs. 50 crores.
Amendment 68: Section 149 (Companies to have Board of Directors)
Independent directors are now not permitted to have any stock option. However, they are permitted to receive remuneration by ways of fees/ profit related commission; as approved by the members.
Amendment 69: Section 165 (Number of directorships)
Under the former Companies Act’1956 a person was permitted to become a director only in 15 companies. Now the bar has been raised to 20; provided that out of 20; a person can be a director only in 10 public companies and includes private companies as well ( Number of directorships in private companies was unlimited earlier).
Transition period of 1 year has been allowed to comply with the above and each of company names wherein the person intends to continue as a director has to be intimated to the Registrar.
Amendment 70: Section 168 (Rule No. 16)
Where in a director resigns from his office, then within 30 days from such resignation, he has to forward a copy of his resignation with reasons thereof to the Registrar.
Amendment 71: Section 173 (Meetings of the Board)
A director can participate in a board meeting via video conferencing/audio visual mode or other modes as may be prescribed. A director who intends to participate via such means shall communicate his intention to the Chairperson/CS of the company. Certain conditions and safeguards have been prescribed provided for meeting through video conferencing.
Amendment 72: Section 177 (Audit Committee read with Rule No. 6)
The Board of Directors of every listed companies and the following classes of companies shall have to constitute an Audit Committee and a Nomination & Remuneration Committee of the Board:
i. All public companies with a paid up capital Rs. 10 crores or more;
ii. All public companies having turnover of > Rs. 100 crores or more and
iii. All public companies having in an aggregate, outstanding loans/ borrowings/ debentures /deposits exceeding Rs. 50 crores or more.
Amendment 73: Section 177 (Audit Committee read with Rule No. 7)
Every listed company along with the companies which belong to the following class or classes shall establish a vigil mechanism for their directors/employees to report their genuine concerns/grievances:-
a. Companies which accept deposits from the public and
b. Companies who have borrowed money from the banks & public financial institutions in excess of Rs. 50 crores.
Amendment 74: Section 178 (Nomination and Remuneration Committee and Stakeholders Relationship Committee)
Every company with more than 1000 shareholders/ debenture-holders/ deposit holders & any other kind of security holders at any time during a FY shall have to constitute a Stakeholders Relationship Committee consisting of a chairperson who shall be a non-executive director & such members as may be decided by the board.
Amendment 75: Section 179 (Powers of the Board read with Rule No. 8)
The board of directors can exercise; few specified additional businesses; only by means of a resolution passed at meetings of Board. A list of certain such businesses shall be:-
a. To make political contributions
b. To appoint or remove KMP (Key Managerial Personnel)
c. To appoint internal auditors and secretarial auditor
d. To buy/sell investments held by the company (other than trade investments) constituting 5% or more of the paid- up share capital and free reserves of the investee company.
e. To invite/accept or renew public deposits & related matters.
f. To approve quarterly, half yearly and annual FS or financials.
Amendment 76: Section 184 (Disclosure of interest by Directors)
In a private company, an interested director can’t vote or take part in the discussion relating to any matter in which he is interested, whereas under the former Companies Act’1956, there was no such restriction.
Amendment 77: Section 185 (Loans to Directors Etc.)
The grant of loans/giving of guarantee/providing of any security to the directors or any other person in whom the director is interested is now prohibited (Certain exemptions have been specified). There is no concept of seeking the approval of the Central Government for the same as well.
Amendment 78: Section 185 (Loans to Directors Etc. Read with Rule No. 10)
Exemption for Loan to Directors, is provided to following transactions:-
a. Any loan made by a holding company to its wholly owned subsidiary or any guarantee/security given by a holding company in respect of any loan made to its wholly owned subsidiary.
b. Any guarantee given or security provided by a holding company in respect of loan made by any bank or financial institution to its subsidiary company is exempted from the requirements under this section.
Primarily, the exemptions are with respect to the loans utilized by subsidiary for its principal business activity.
Amendment 79: Section 186 (Loan and Investment by Company)
The provisions under Section 372A of Companies Act’1956 regarding inter-corporate loans and investments has now been extended to include loans & investments to any person.
Amendment 80: Section 186 (Loan and Investment by Company)
A company (unless prescribed otherwise), can’t make investment through more than 2 layers of investment companies; subject to certain exemptions.
Amendment 81: Section 188 (Related Party Transaction)
Unlike Section 297 of Companies Act’1956, no approval of the central government is now required for entering into any related party transactions. However, for certain new (not existing ones) transactions, board approval shall be required.
Amendment 82: Section 188 [Related Party Transaction read with Rule No. 15 (3) (ii)]
A company which has a paid up share capital of > Rs. 10 crores is not permitted to enter into a contract or arrangement with any related party for the below mentioned transactions unless a prior approval of the company via a special resolution:-
a. Sale/ Purchase or supply of any goods or material directly or via appointment of agents exceeding 25% of the annual turnover as mentioned in clause (a) and clause (e) respectively of sub-section (1) of Section 188.
b. Selling or otherwise disposing/buying property of any kind directly/via appointing agent; which exceeds 10% of net worth as mentioned in clause (b) & clause (e) respectively of sub section(1) of Section 188.
c. Leasing of property of any kind exceeding 10% of the net worth or exceeding 10% of the turnover as mentioned in clause (c) of sub-section (1) of Section 188.
d. Availing or rendering of any services directly/ via appointment of agents exceeding 10% of the net worth as mentioned in clause (d) and clause (e) of Section 188.
e. Appointment to any office or place of profit in the company/its subsidiary/associate at a monthly remuneration which exceeds Rs. 2.5 lakhs.
f. Remuneration for underwriting the subscription of any securities or derivatives thereof of the company exceeding 1% of the net worth as mentioned in clause (g) of sub-section (1) of Section 188.
Amendment 83: Section 196 (Appointment of Managing Director, Whole Time Director or Manager)
Provisions relating to the appointment of MD/ WTD/Manager shall now apply to a private company as well.
Amendment 84: Section 197 (Overall maximum Managerial Remuneration and Managerial Remuneration in case of absence or inadequacy of profits read with Rule No.4)
The sitting fees amount payable to a director for attending meetings of the Board/ Committees shouldn’t exceed a sum of Rs. 1 lakh per meeting of the Board/ Committee. However, it has been specified that the sitting fees for Independent & Women Directors, shall not be less than the sitting fee payable to other directors.
Amendment 85: Section 204 (Secretarial Audit for Bigger Companies Read with Rule No. 9)
Apart from every listed company/ every public company having a paid-up share capital of Rs. 50 crores or more OR turnover of Rs. 250 crores or more; shall annex with its Board Report; a Secretarial Audit Report.
Amendment 86: Section 205 (Functions of Company Secretary read with Rule No. 10)
The Act & rules prescribes the functions of a CS like:-
a. To provide to the directors of the company, collectively & individually; such guidance as they may require; with regard to their duties, responsibilities as well as powers.
b. To facilitate the convening of meetings & attend Board, committee & general meetings & maintain the minutes of these meetings.
c. To obtain approvals from the Board, general meeting, Government & such other authorities as required under the provisions of the Act.
d. To represent before various regulators & other authorities under the said Act in connection with discharge of various duties thereunder.
Tags :Corporate Law